Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the financial statements and related notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2024.

This discussion contains certain forward-looking statements that involve risks and uncertainties. Our actual results and the timing of certain events could differ materially from those discussed in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth herein and elsewhere in this Quarterly Report and in our other filings with the Securities and Exchange Commission. See "Cautionary Note Regarding Forward Looking Statements."

Plan of Operations

In July 2022, our board of directors resolved to restructure our business to focus exclusively on the development of a large-scale data center campus, initially in Imperial County, California. In implementing our plan, we determined that we would consider the acquisition of assets or all or part of other companies operating in the clean energy or data center infrastructure industries or opportunities to invest in, or joint venture with, other more-established companies already in the industry that would add value to our business strategy.

Over the last two and a half years, we have worked with the County of Imperial, California to integrate data centers as an "approved use" into its 51,000-acre Lithium Valley Specific Plan. In July 2024, we contracted to purchase a 315-acre site in the center of Lithium Valley, which offered nearby grid connectivity and proximity to geothermal power plants, fiber connectivity, transportation, gas, water and other resources. In parallel to working with the County, we worked with geothermal power companies to develop a portfolio of power that could be delivered to our site and used for powering a clean-energy data center development. However, by May 2025, it became evident that our timelines for the receipt of the required regulatory approvals would not be met. Key factors driving the delay included the need for additional environmental studies, unresolved community concerns, and several outstanding government approvals. As a result, we elected not to renew our purchase option on a 315-acres parcel of land in Imperial County when it expired in July 2025 and to shift our development efforts to other locations in which the regulatory environment for data center development and the purchase of available power may be more favorable and the timelines in which we may receive all required regulatory approvals may be shorter.

In May 2025, we formed TerraVolt Infrastructure Inc. ("TerraVolt"), a wholly-owned subsidiary established to meet the demand for sustainable, baseload, powered land and infrastructure solutions for large-scale data centers development and end users. TerraVolt's proposed solution is an Infrastructure-as-a-Service (IaaS) Platform that will integrate a portfolio of grid and behind-the-meter power with construction-ready data center building sites that include utilities and fiber connectivity. TerraVolt plans to provide this turnkey solution to hyperscalers, colocation providers, and data center developers seeking to deploy new capacity faster than with traditional power generation and transmission. We are currently focused on the identification of properties in states in which onsite power production utilizing natural gas fuel cells and turbines are allowed and in which we can acquire access to natural gas pipeline and capacity for delivery within a reasonable timeframe. We are still considering the use of geothermal power, but are no longer considering the development of the well field, only the co-development and ownership of the power plants as the off-taker and user of the power produced.

We believe TerraVolt's IaaS Platform will address many time-to-power challenges for the data center industry. With AI, cloud computing and high-performance computing driving exponential growth in electricity consumption, the demand for entitled property with the required infrastructure and a proven path to power in a favorable timeframe has become critical:

	●	The U.S. data center industry currently consumes 4% of all electricity produced in the United States and is projected to consume as much as 10% within the next five years.
	●	Grid-served power is becoming less predictable in both cost and availability, and the data center industry is seeking alternative power solutions that accelerate deployment timelines while meeting the critical demands for reliability, sustainability and cost-effectiveness.
	●	Hyperscale, colocation providers, and data center developers are looking beyond traditional power generation and transmission to solutions that offer better time-to-power that will help them deliver capacity faster.

TerraVolt has recently assembled a team of land use and data center experts that are currently evaluating a number of locations with favorable energy resources and welcoming local, county and state officials that will support timely power plant construction, behind-the-meter power delivery, and large-scale data center developments. However, we currently have only limited capital with which to pay our anticipated expenses. To fund our business plan going forward, we intend to raise funds from investors by issuing our common stock, preferred stock and/or debt securities.

Results of Operations for the nine months ended September 30, 2025 and 2024

The table summarizes the results of operations for the nine months ended September 30,

										Change
		2025				2024				Dollar				Percentage
Revenues		$	-			$	-			$	-				-	%
Operating Expenses
Professional fees			270,000				300,000				(30,000	)			(10.0	)
Equity-based compensation			(10,000	)			318,000				(328,000	)			(103.1	)
General and administrative			33,000				42,000				(9,000	)			(21.4	)
Payroll and related expenses			421,000				175,000				246,000				140.6
Total operating expenses			714,000				835,000				(121,000	)			(14.5	)
Other (expenses) income
Interest income			4,000				10,000				(6,000	)			(60.0	)
Financing cost			(132,000	)			(823,000	)			(691,000	)			(84.0	)
Financing costs - related party			(321,000	)			(869,000	)			(548,000	)			63.1
Abandoned project			(4,581,000	)			(344,000	)			4,237,000				1,231.7
Loss on extinguishment of debt			-				(6,468,000	)			(6,468,000	)			(100.0	)
Total other expenses		$	(5,030,000	)		$	(8,494,000	)		$	(3,476,000	)			(40.9	)%

Revenues

For the nine months ended September 30, 2025 and 2024, we had no revenues.

Operating Expenses

Professional fees

Our professional fees decreased to $270,000 for the nine months ended September 30, 2025 from $300,000 for the nine months ended September 30, 2024. The decrease of approximately $30,000 was attributable to a decrease in our consulting fees of approximately $28,000, a decrease in our legal fees of $43,000, a decrease in our accounting fees of $3,000, and a decrease in filing fees of $10,000, which was offset in part by an increase in our audit fees of approximately $14,000, and an increase in transfer agent costs and geologist costs of approximately $40,000.

Equity-based compensation

Our equity-based compensation for the nine months ended September 30, 2025 decreased to $(10,000) from $318,000 for the nine months ended September 30, 2024. During the nine months ended September 30, 2025, we recorded a recapture of approximately $236,000 of equity-based compensation related to the non-performance of the performance-based awards. That recapture exceeded by $10,000 the equity- based compensation expense of $226,000 for the time-based equity awards during the nine months ended September 30, 2025.

Payroll and related expenses

Payroll and related expenses increased to $421,000 for the nine months ended September 30, 2025 from $175,000 for the nine months ended September 30, 2024. The increase of $246,000 related to our abandonment of our data center campus project in Imperial County, California in July 2025. Therefore, during the second and third quarters of 2025, we did not capitalize payroll and related expenses.

Financing costs

Our financing cost for the nine months ended September 30, 2025 decreased to $132,000 from $823,000 for the nine months ended September 30, 2024. The decrease was due to a decrease in the 2025 interest expense and amortization of debt issuance costs associated with our convertible debentures issued during the year ended December 31, 2024

Financing costs - related party

Our financing cost - related party for the nine months ended September 30, 2025 decreased to $321,000 from $869,000 for the nine months ended September 30, 2024. The decrease of $548,000 was due to a decrease in interest and loan discount expense for notes payable to the related party.

Results of Operations for the three months ended September 30, 2025 and 2024

The table summarizes the results of operations for the three months ended September 30,

		2025				2024				Dollar				Percentage
Revenues		$	-			$	-			$	-				-	%
Operating Expenses
Professional fees			93,000				44,000				49,000				111.4
Equity-based compensation			93,000				88,000				5,000				5.7
General and administrative			20,000				4,000				16,000				400.0
Payroll and related expenses			153,000				82,000				71,000				86.6
Total operating expenses			359,000				218,000				141,000				64.7
Other (expenses) income
Interest income			2,000				1,000				1,000				100.0
Financing cost			(55,000	)			(817,000	)			(762,000	)			(93.3	)
Financing cost - related party			(246,000	)			-				246,000				100.0
Abandoned projects			-				(344,000	)			(344,000	)			(100.0	)
Total other expenses		$	(299,000	)		$	(1,160,000	)		$	(859,000	)			(74.1	)%

Revenues

For the three months ended September 30, 2025 and 2024, we had no revenues.

Operating Expenses

Professional fees

Our professional fees increased to $93,000 for the three months ended September 30, 2025 from $44,000 for the three months ended September 30, 2024. The increase of approximately $49,000 was attributable to an increase in our consulting fees of approximately $26,000, an increase in our legal fees of $7,000, an increase in our audit fees of $2,000, and an increase in transfer agent costs and geologist for approximately $14,000.

Equity-based compensation

Our equity-based compensation for the three months ended September 30, 2025 increased to $93,000 from $88,000 for the three months ended September 30, 2024.

Payroll and related expenses

Payroll and related expenses increased to $153,000 for the three months ended September 30, 2025 from $82,000 for the three months ended September 30, 2024. The increase of $71,000 related to our abandonment of our data center campus project in Imperial County, California in July 2025. Therefore, during the three months ended September 30, 2025, we did not capitalize payroll and related expenses.

Financing costs

Our financing cost for the three months ended September 30, 2025 decreased to $55,000 from $817,000 for the three months ended September 30, 2024.

Financing costs - related party

Our financing cost - related party for the three months ended September 30, 2025 increased to $246,000 from $nil for the three months ended September 30, 2024. The increase was due to interest expense and amortization of debt issuance costs associated with our notes payable to the related party issued during the three months ended September 30, 2025.

Liquidity and Capital Resources

Our working capital as of September 30, 2025 and December 31, 2024 was as follows.

		2025				2024
Current assets		$	287,000			$	296,000
Current liabilities			(1,163,000	)			(515,000	)
Working capital deficit		$	(876,000	)		$	(219,000	)

Our working capital deficit increased from a $219,000 deficit as of December 31, 2024 to a deficit of $876,000 as of September 30, 2025 for an increase of $657,000. The increase in working capital deficit was due to a $12,000 decrease in cash and cash equivalents, a $3,000 increase in prepaid and other current assets, a $188,000 increase in accounts payable and accrued expenses, and a $460,000 increase in notes payable - related party.

Cash Flows

		For the nine months ended September 30,
		2025				2024
Net cash used in operating activities		$	(513,000	)		$	(492,000	)
Net cash used in investing activities			(464,000	)			(1,085,000	)
Net cash provided by financing activities			965,000				1,426,000
Effect of exchange rate changes on cash and cash equivalents			-				(1,000	)
Change in cash and cash equivalents during the period			(12,000	)			(152,000	)
Cash and cash equivalents, beginning of period			286,000				308,000
Cash and cash equivalents, end of period		$	274,000			$	156,000

Cash Flows from Operations

Cash used in operating activities increased to approximately $513,000 for the nine months ended September 30, 2025 from approximately $492,000 for the nine months ended September 30, 2024, which was predominantly related to the decrease in our expenditures for filing fees, legal fees, transfer agent fees and consulting fees paid during the period, which was offset by a decrease in our cashflows from investing activities, as we did not capitalize cost associated with the data center during the three months ended September 30, 2025.

Cash Flows from Investing

Our cash used in investing activities decreased to approximately $464,000 for the nine months ended September 30, 2025 from approximately $1,085,000 for the nine months ended September 30, 2024. The primary use of cash was for expenditures for the development of our data center campus. For the three months ended September 30, 2025, we did not capitalize cost associated with the data center.

Cash Flows from Financing

Our cash provided by financing activities decreased to approximately $965,000 for the nine months ended September 30, 2025 from approximately $1,426,000 for the nine months ended September 30, 2024. The decrease was due to our incurring less debt in the nine months ended September 30, 2025.

Liquidity and Material Cash Requirements

Even though we experienced negative cash flows from operations of approximately $513,000 for the nine months ended September 30, 2025, as a result of our issuance of convertible debentures in the aggregate principal amounts of $215,000 and the issuance of notes payable to a related party in the aggregate principal amount of $750,000, we had cash and cash equivalents of approximately $274,000 as of September 30, 2025. As of September 30, 2025, we had outstanding approximately $1,635,000 principal amount of convertible debentures with a maturity date on December 31, 2026 and $750,000 principal amount of promissory notes with a maturity date of January 31, 2026.

As discussed above, we have outstanding indebtedness in the aggregate amount of $2,304,000 maturing prior to December 31, 2026. In addition, it is anticipated that we will incur expenses in the implementation of our business plan described above, and such expenses will require substantial financing to complete the development of the property for a data center operation and to achieve our goals. We currently have only limited capital with which to pay our outstanding indebtedness and these anticipated expenses. To pay our outstanding indebtedness and to fund our business plan going forward, we intend to raise funds from investors by issuing common stock, preferred stock and/or debt securities. We are currently in discussions with several potential funding sources. However, there can be no assurance we will be able to successfully raise additional funds when required, if at all.

The failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our development plans, any commercialization efforts or other operations. We may not be able to secure financing on favorable terms, or at all, to meet our future capital needs. In addition, even if we are able to obtain sufficient funding to commence our business operations, we may need to pursue additional financing in the future to make expenditures and/or investments to support the growth of our business and may require additional capital to pursue our business objectives and respond to new competitive pressures, pay extraordinary expenses or fund our growth, including through acquisitions. Additional funds, however, may not be available when we need them on terms that are acceptable to us, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to commence our proposed business operations, to continue to grow and support our business and to respond to business challenges could be significantly limited.

Going Concern

The unaudited financial statements included in this Report have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. We are presently in the development stage and, apart from our cash balances, have only limited assets. Our company has not generated revenues in the last two fiscal years, has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of our company as a going concern is dependent upon: (i) continued financial support from our shareholders; (ii) the ability of our company to continue raising necessary debt or equity financing to achieve its operating objectives; and (iii) our ability to acquire assets and establish a business or merge or otherwise acquire business opportunities.

Our independent auditors included an explanatory paragraph in their report on our financial statements for the year ended December 31, 2024 regarding concerns about our ability to continue as a going concern. In addition, our financial statements contain further note disclosures in this regard. The implementation of our business plan is dependent upon our ability to continue raising sufficient new capital from equity or debt markets in order to fund our on-going operating losses and real estate acquisition activities. The issuance of additional equity securities could result in a significant dilution in the equity interests of our current stockholders.

Application of Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures of our company. Although these estimates are based on management's knowledge of current events and actions that our company may undertake in the future, actual results may differ from such estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of our company and our wholly-owned subsidiary from the formation date. All material intercompany transactions and balances have been eliminated in consolidation.

Foreign Currency Translation

The financial statements of our former foreign subsidiary, for which the functional currency is the local currency, was translated into U.S. dollars using the exchange rate at the consolidated balance sheet date for assets and liabilities and a weighted-average exchange rate during the year for revenue, expenses, gains and losses. Translation adjustments were recorded as other comprehensive income (loss) within shareholders' equity (deficit). Gains or losses from foreign currency transactions are recognized in the consolidated statements of operations.

Debt and Debt Discounts

In accordance with ASC 470-20, Debt with Conversion and Other Options, we first allocate the cash proceeds of any notes we sell with warrants between the notes and any warrants on a relative fair value basis. Proceeds are then allocated to the conversion feature.

We account for debt discounts originating in connection with conversion features that remain embedded in the related notes in accordance with ASC 470-20. These costs are classified on the balance sheet as a direct deduction from the debt liability. We amortize these costs over the term of our debt agreements as financing cost in the consolidated statement of operations and comprehensive loss.

Stock-Based Compensation

We account for our stock-based compensation under ASC 718, "Compensation - Stock Compensation" using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments.

We use the fair value method for equity instruments granted to non-employees and use the BSM model for measuring the fair value of options. The stock-based fair value compensation is determined as of the date of the grant (measurement date) and is recognized over the vesting periods.

Recent Accounting Pronouncements

Our management reviewed all recently-issued accounting standard updates ("ASU's") not yet adopted by our company and does not believe the future adoptions of any such ASU's may be expected to cause a material impact on our consolidated financial condition or the results of our operations.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial position, revenues and expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.